Spain: All Crisis, No Solutions for Savers

For Spanish savers, the financial pages are all crisis, no solution...

Spain's financial crisis might be hardening the politics of capitalists vs.
workers and the unemployed, but it's hardly benign for the first group.

The IBEX 35 stock market
index has fallen very nearly to the 6-year low hit in March 2009, and closed
Friday at levels first seen in 1997. Worse still, according to the Bank of
Spain's latest Financial
Stability Report...

The value of mutual funds has halved since 2007;

Private companies are choosing to hold bank deposits in other countries;

The new Royal Decree Law - capping mortgage-interest rates for borrowers
- has "in effect limited the interest rates offered by banks on their deposits";

Seeking higher rates of return, households are increasingly accepting Spanish
bank products which are not covered by the deposit guarantee fund (FGD).

Given this financial crisis, you might expect Spanish savers and investors
to be choosing Gold
Investment instead. "Years of low return on risk capital go with years
of high returns on gold," as John Dizard of the Financial Times put
it way back in 2007. And years of low returns is precisely what Spain's finance
industry has been delivering since long before then.

Yet the Spanish media's financial press, stuffed full of crisis headlines
like everything else (including the sports pages after last week's dismal Champions
League results), isn't pointing to possible escape routes. Indeed, the only
news on gold - the classic escape from low interest rates and bank-credit risk
- is that "the rush peaked last year" and interest is now waning.

"Gold has traditionally been a safe haven," says Expansion, "having
a very low correlation or even negative correlation with risky assets, allowing
investors to reduce the total risk of their portfolio. This feature attracted
many investors [worldwide], anticipating declines in risky assets. But gradually
the good performance of gold attracted more investors, who began to speculate
in the metal."

Forecasting a "very common" event for gold today, Expansion sees later
investors caught out as the market turns - a view which may well prove to be
true. Who can say for sure right now? Any Spanish citizen buying gold in mid-2007,
even as the financial crisis became plain to see, would now have 135% more
in Euro terms, and after paying tax on their gains, too.

The crisis which drove them to buy has only got worse. The current lull in
prices, and the current lull in global demand, doesn't square with the miserable
facts or outlook for returns on risk capital either in Madrid or elsewhere.

Formerly City correspondent for The Daily Reckoning in London and head of
editorial at the UK's leading financial advisory for private investors, Adrian
Ash is the head of research at BullionVault,
where you can buy gold
today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

About BullionVault

BullionVault is the
secure, low-cost gold and silver exchange for private investors. It enables
you to buy and sell professional-grade bullion at live prices online, storing
your physical property in market-accredited, non-bank vaults in London, New
York and Zurich.

By February 2011, less than six years after launch, more than 21,000 people
from 97 countries used BullionVault,
owning well over 21 tonnes of physical gold (US$940m) and 140 tonnes of physical
silver (US$129m) as their outright property. There is no minimum investment
and users can deal as little as one gram at a time. Each user's unique holding
is proven, each day, by the public reconciliation of client property with formal
bullion-market bar lists.

BullionVault is a
full member of professional trade body the London Bullion Market Association
(LBMA). Its innovative online platform was recognized in 2009 by the UK's prestigious
Queen's Awards for Enterprise. In June 2010, the gold industry's key market-development
body the World Gold Council (www.gold.org)
joined with the internet and technology fund Augmentum Capital, which is backed
by the London listed Rothschild Investment Trust (RIT Capital Partners), in
making an $18.8 million (£12.5m) investment in the business.

Please Note: This article is to inform your thinking, not lead it.
Only you can decide the best place for your money, and any decision you make
will put your money at risk. Information or data included here may have already
been overtaken by events - and must be verified elsewhere - should you choose
to act on it.